FTA opens high-growth market of India for baked goods, chocolates, beverages

Indian packaged food products in this segment exported to the UK market are largely targeted at Indian diaspora consumers, industry observers noted
| Photo Credit:
K.V.S. GIRI

The recently inked free-trade agreement will enable UK consumer brands to tap into the high-growth Indian market with a range of exports including baked goods, chocolates and soft beverages at lesser price points. This also comes at a time when premiumisation is gaining ground in the consumer products space. While this could potentially intensify competition in some segments, it is also likely to lead to collaborations between players of the two countries.

Priyanka Duggal, Partner, Grant Thornton Bharat said, “India’s large and aspirational urban consumer base offers substantial potential for scale, especially for heritage or differentiated UK brands, entering the country tariff-free. However, the success for these will need to be strategised carefully for ensuring localisation of the same. Adapting to Indian taste profiles, price sensitivities and regional preferences will be critical and hence JVs or co-branded strategies may be a clear win-win for both Indian and UK companies. This will also ensure UK companies are able to navigate India’s multilayered regulatory ecosystem smoothly with Indian partnerships or JVs.”

Non-tariff factors

She noted while the FTA simplifies tariff barriers, non-tariff factors such as foreign exchange regulations, corporate tax implications, repatriation strategies, regulatory regime, including food safety standards and labelling norms, “will require careful structuring and evaluation to ensure smooth market entry and sustainable operations.”

Suresh Nair, Indirect Tax Partner-Consumer Products and Retail, EY India, said, “The UK-India FTA’s tariff reductions on these products could possibly increase competition for Indian businesses, particularly from UK brands gaining price advantages in the Indian market. While large Indian firms may be better equipped to compete due to their scale and brand loyalty, smaller players could struggle unless they innovate or find niche markets or segments to remain viable. However, the FTA also offers Indian businesses opportunities to export to the UK and integrate into global supply chains, which are silver linings, provided they can meet international standards, which would be critical.”

A senior executive with a leading packaged food firm said the baked goods category is expected to see a limited impact in terms of competition as it will be difficult for these imported products to play in the mass segment in a viable manner. Hence, such products are likely to play more in the premium segment, which is still a niche segment, the executive added.

Indian packaged food products in this segment exported to the UK market are largely targeted at Indian diaspora consumers, industry observers noted.

Published on May 8, 2025